[Netherlands] Ruling reduces tax-free allowance for expats to 27%

In the Netherlands, the government has confirmed changes to its Expat Scheme. The scheme allows eligible foreign employees working in the country temporarily to receive a tax-free allowance to offset the additional costs associated with living and working abroad, DLA Piper reports.

The scheme currently provides a tax-free allowance of up to 30 per cent of eligible remuneration. From January 1, 2027, the maximum allowance will drop to 27 per cent. A higher salary threshold will also apply from that date.

Transitional rules will reportedly apply, based on when an employee first became eligible for the scheme. Employees already benefiting from the arrangement by December 31, 2023 will continue to be covered by the existing 30 per cent rate. Individuals who entered the scheme from 2024 onwards will generally be subject to the reduced 27 per cent rate from 2027.

The regime will continue to be subject to a remuneration cap of €262,000 per year, which will apply to all beneficiaries from January 1, 2026. DLA Piper advises employers with internationally mobile workforces to consider reviewing the changes and assess their potential impact on assignment costs, recruitment strategies and employee compensation packages.

Source: DLA Piper

In the Netherlands, the government has confirmed changes to its Expat Scheme. The scheme allows eligible foreign employees working in the country temporarily to receive a tax-free allowance to offset the additional costs associated with living and working abroad, DLA Piper reports.

The scheme currently provides a tax-free allowance of up to 30 per cent of eligible remuneration. From January 1, 2027, the maximum allowance will drop to 27 per cent. A higher salary threshold will also apply from that date.

Transitional rules will reportedly apply, based on when an employee first became eligible for the scheme. Employees already benefiting from the arrangement by December 31, 2023 will continue to be covered by the existing 30 per cent rate. Individuals who entered the scheme from 2024 onwards will generally be subject to the reduced 27 per cent rate from 2027.

The regime will continue to be subject to a remuneration cap of €262,000 per year, which will apply to all beneficiaries from January 1, 2026. DLA Piper advises employers with internationally mobile workforces to consider reviewing the changes and assess their potential impact on assignment costs, recruitment strategies and employee compensation packages.

Source: DLA Piper